Buying your first home? You’re not alone if it feels like a big hill to climb… especially when it comes to saving up for that down payment. Between rising home prices and day-to-day living costs, reaching that 20% mark can feel out of reach.
That’s where a High-Ratio Mortgage comes in. While it might sound a bit technical, the idea is simple: this type of mortgage can help you get into your first home with less money upfront.
What is a High-Ratio Mortgage… Really?
In Canada, if your down payment is less than 20% of the purchase price of your home, your mortgage is considered “high-ratio.” That means the loan makes up a higher portion of the cost of the home.
When this happens, the mortgage must be insured. That insurance isn’t for you—it’s for the lender, just in case you can’t make your payments. This is what makes it possible for lenders to offer mortgages to people who haven’t yet saved up that full 20%.
The best thing about a High-Ratio Mortgage is that it can get you into a home sooner! Saving up 20% for a home in places like Southern Ontario can take years. A High-Ratio Mortgage lets you buy your first owner-occupied home with as little as 5% down (depending on several qualification factors; subject to CMHC requirements. You can learn about those requirements here!).
Also, when your mortgage is insured, the insurance premium gets added to your loan. The amount depends on how much you put down. It’s not a dealbreaker for most folks; it’s good to be aware of. You’ll also need to meet the regular checks like the mortgage stress test, which makes sure you could still afford your payments if interest rates go up a bit.
Think of it like this: the insurance makes your lender more comfortable and that gives you a better shot at being approved.
Is it Right for Me?
A High-Ratio Mortgage can be a great fit if:
- You’re a first-time buyer;
- You’ve got a secure income—just not a 20% down payment;
- You’re buying with a partner, a parent, or a friend; or
- Your family is helping you out with part of the down payment.
More and more young Canadians are leaning on family support—through gifts, co-signing, or co-ownership. In fact, nearly a third of first-time buyers now receive help with their down payment! A High-Ratio Mortgage often works hand-in-hand with those kinds of arrangements.
We know buying your first home is a big step; you don’t have to take it alone. We’ll sit down with you (or hop on a call!) and walk through your situation—no pressure, just honest, expert advice from people who care. From explaining the different mortgage options available to you, to helping guide you through each step. We’re here to help!
Book a meeting with a member of our Personal Lending Team today.
Download the First-Time Home Buyers' Guide